Globalization Of Acne Studios Into United States Market

Globalization of Acne Studios into United States market
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Globalization of Acne Studios into United States market
Organizations seek to expand their operations into worldwide markets when local markets are near or already reached saturation point or for any other relevant reason. According to Cao et al 2016, indeed, the main objective of engaging into any business venture is first to make profit. Being in the fashion industry, circumstances are no different. People around the globe are fashion conscious about them and will seek new trends of clothes that may present themselves. Others dress for comfort or according to the weather patterns. Therefore, there is a great potential in expanding activities elsewhere and beyond the home country. The company Acne Studios started operations initially in Sweden and was only dealing with women’s clothes but later on decided to venture into men’s clothes which were a huge success. More stores were open continuously as a result until it came to a point where there was a need to seek new markets across United States of America and expand operations there. International trading raises the levels of profits and sales while enhancing the prestige of the company, creating numerous job opportunities. Similarly, going global means the company devises ways to overcome fluctuations that occur repetitively.
Thesis statement
Indeed the paper seeks to analyze what economic factors to consider for Acne Studios to enter United States market.
Firm level factors:
Firstly, technological advancement plays a crucial role in the globalization process. Improvement of communication and transport has enabled firms decide to expand operations on a global scale. Firms are able to move their products to new centers of operations at ease. Also, branches operating everywhere are able to pass business information courtesy of the technological advancement which affects how companies transact business. Over the years, there has been remarkable transition in the way information is disseminated. Previously, business information would take too long to arrive at the required destination using such methods as post mails. With the booming introduction of the internet, branches of business can easily coordinate and pass information using email and other online platforms.
Additionally, technology has an impact upon transportation in that companies can move their products faster reaching the customer within short time periods. As such, technology in general improves the prospects of companies going global. In addition, auxiliary services include all institutions that offer facilitative services which make it easier to conduct business in foreign markets. Such services include banking, logistics and shipping services among others. Therefore, companies are constantly empowered to venture into new markets. For instance, when making sales, the business outlets in overseas markets need to have a way to safely bank their money. Security services are such auxiliary institutions which offer escort services for the money to be transited to the bank for safe keeping. The bank also is an auxiliary service since they may offer loan services required to boost the financial status of the company.
Moreover, consumer knowledge implies that the customer, with the assistance of technological advancements, tend to know what they want even when it is not readily available for them. As such, the company is able to penetrate new markets globally at ease with minimal marketing efforts since the customers already had the information about what the new company has in the market. Perfect market structures dictates that there knowledge spreads freely both for the benefits of the supplier and the consumer.
Furthermore, apparently, there are places around the globe where operating business is really affordable. Costs such as labor are reduced. The prevailing minimum wage is lower in such countries than in others. Additionally, the general overhead cost of operation such as electricity bills is also affordable. For this reason, companies are attracted to certain countries in the world where they perceive will have a positive impact on the cost of production ultimately maximizing profit.
Also, entry in markets where there are few or no competitors has the advantage of minimal cost of marketing. This is caused by experiencing a certain degree of market dominance. As such, firms set aside fewer funds for marketing strategies in the new markets as compared to markets where there is tough competition. This reduced cost of marketing may actuate a firm to venture in certain markets across the globe. Funds saved due to reduced marketing activities are channeled to other course such as expansion to other global markets or improving the current product in terms of the quality.
Country level factors
Removal of trade restrictions means that countries are lifting up harsh trade policies against each other which were previously imposed. Therefore, affiliate companies from such countries are able to enter new markets. Countries are entering into bilateral trade agreements which enable companies set up operations within the boundaries of such countries.
Additionally, countries are also setting up economic zones which promote trade amongst themselves. Also there are introduction of friendly trade policies such as tax exemption made by various countries which are too lucrative for multinational firms to avoid when such opportunities arises. Moreover, global competition implies that the consumers of oversea countries are able to enjoy a variety of goods and services coming from abroad.
Also, local companies are able to adopt strategies which they observe from the multinational companies setting camp in the countries. Global companies also get to learn and adopt strategies and methods which they deem appropriate for the growth of the companies from their counterparts in the local markets which they venture into. Improvement of political relationships means that countries which previously considered each other as political enemies and could not associate are now opening up. This has ushered new opportunities for business seeking to expand their traditional business boundaries. With improved political relationship even within the confines of a country, means that it brings also political stability in such countries. Countries with no feud arising from political issues attract multinationals to invest in their economies since there is a sense of political goodwill and therefore when peace prevail means that business will take place smoothly.
Also, other countries have signed treaties for cooperation amongst themselves. As such, those treaties are binding and therefore act as security for businesses from either side of the countries engage with each other. Companies dealing with unfinished products are able to sell their products to other companies which further process their products as intermediary to produce finished products which can be readily consumed. Additionally, the global size of the market is too large for few companies to operate alone. Therefore, multinationals seek out such markets where local companies would not sufficiently be able to meet the entire demand in the market.
Additionally, governments are also unable to supply public goods and services which leave them with the option of seeking the expertise of private multinational companies to offer their assistance in delivering such services and goods at an agreed price. Moreover, language barriers are being broken in that you find large sections of countries are speakers of a similar language. It therefore becomes easier for companies to penetrate such markets since they can comfortably relate with their cultural differences from the product or service stand point. For instance, European countries have a similar way of dressing which is distinguished from other places in the world. This is likewise compared to other places in the globe. As such, multinational business will be able to segment its markets based on cultural uniqueness.
Furthermore, in particular places in the world, the cost of insurance is more affordable than in other places. Businesses are therefore able to mitigate their risks by taking insurance covers which suit their operations. As such, venturing in such areas where cost of insurance is affordable enhances their need for globalization process.
Licensing in the United States
Through a licensing agreement, Acne Studios will be in a position to grant the privileges of intangible property to other businesses in a specific period while in return the company will receive royalty from the subsidiary company. For this reason, we shall minimize the risks and costs of establishing and developing our operation in the foreign market through such mode of entry...